Gartner's Q3 Profit Drops 91% on Goodwill Charge, Buybacks Top $1B

Gartner Inc. (NYSE: IT), the global research and advisory firm, recently released its financial results for the third quarter of 2025. At a glance, the report presents a complex picture: while total revenue saw a modest uptick, the bottom line tells a very different story, with net income taking a significant hit. Let's dive into the details of their latest 10-Q filing to understand the key drivers behind these numbers.

A helpful way to visualize a company's financial performance is to trace how revenue flows through various costs to eventually become profit. The following flow diagram illustrates Gartner's income statement for the third quarter ended September 30, 2025.

A Significant Write-Down

The most impactful event this quarter was a $150 million goodwill impairment charge. In simple terms, a goodwill impairment is a non-cash accounting charge a company records when the value of a previously acquired business is determined to be lower than its carrying value on the balance sheet.

According to the filing, this impairment was related to the "Digital Markets" reporting unit, which is part of Gartner's "Other" segment. This segment's revenue declined by 23% year-over-year, from $71.4 million to $55.2 million. The write-down was a primary factor in operating income falling 65% to $86.3 million, compared to $245.8 million in the same quarter last year.

It's also crucial to note that the prior year's third-quarter results were boosted by a one-time $300 million gain from event cancellation insurance claims. The absence of this gain in 2025, combined with the new impairment charge, explains the dramatic 91% drop in net income, from $415 million in Q3 2024 to just $35.4 million in Q3 2025.

A Look at the Core Business

Despite the headline-grabbing impairment, Gartner's core business segments showed resilience.

• Insights: This is Gartner's largest and most profitable segment, providing research and advisory services. It posted a solid 5% revenue growth, reaching $1.27 billion for the quarter. Its gross contribution margin also improved slightly to 77%.
• Conferences: Revenue from this segment was nearly flat, down 2% to $74.6 million.
• Consulting: This segment saw a 3% dip in revenue to $123.6 million, with a notable decrease in consultant utilization from 65% to 60%.

The performance of the Insights segment underscores the stability of Gartner's subscription-based research model, which continues to be its primary engine.

Aggressive Share Buybacks

Another key takeaway from the report is the company's aggressive strategy for returning capital to shareholders. Gartner spent a staggering $1.06 billion on share repurchases during the third quarter alone, according to its Statement of Changes in Stockholders' Equity. This represents a massive increase from the $63.7 million spent in the same period last year. For the first nine months of 2025, the company has spent nearly $1.5 billion buying back its own stock. Such a significant buyback program often signals that management believes the company's shares are undervalued.

Final Thoughts

Gartner's third-quarter results were heavily impacted by a significant write-down in a smaller division and a difficult year-over-year comparison due to a large one-time gain in 2024. The goodwill impairment in Digital Markets is a clear setback, but the steady growth in the crucial Insights segment provides a solid foundation. As the company navigates challenges in its smaller segments, its heavy investment in share buybacks will be a key factor for investors to watch in the coming quarters.